Outsourcing IT services is a complex process. In fact, it’s not something that you can do in a day or even a week. It’s a detailed process where you need to take your time and think things through as there are many factors involved.
When it comes to outsourcing IT services or changing providers, businesses are often unsure where to start and how to ensure their relationship with the new provider is successful. To get the best results from outsourcing, you need to understand what is involved and ensure that you’ve thought through these points before making a final decision. So before you kick off your project, read this article for an insider view of the key steps involved in outsourcing your IT services.
1. Planning your IT outsourcing solution
Planning and preparation are essential before outsourcing any company function. First step is to determine what you hope to achieve by outsourcing your IT services. This might include reduced expenses, enhanced security and service quality, visibility, or cloud migration. As a result, you can plan an outsourced project that is tailored to the specific requirements of your company.
As part of your planning, consider any technological improvements, decommissioning opportunities and the type of suppliers that may deliver the best value for your business.
If you are changing IT providers, you should also carefully plan to reduce overlapping costs resulting from using two providers at once during the changeover. Professionally managing the relationship with the incumbent will increase your chances of a smooth transition. Remember that they still have the keys to all your systems and the new provider will require a good handover from them.
Keep a log of your key risks and monitor these continuously to minimise surprises.
2. Invite providers to tender and choosing a preferred provider
With so many providers out there offering IT services, it can be hard to know what you're getting into. You could end up with a poorly managed provider that's not much different than what you are experiencing today.
The first thing you should do while selecting a supplier to bid on is to identify a short list of providers, ideally three but no more than five that you would like to invite to your tender. You should choose IT providers based on their level of experience working with organizations similar to yours, their credentials, and their local capabilities to deliver the services you require.
In our experience, there is one capability that separates good providers from the pack. Strong IT providers mostly have an internal program to improve customer service, either via Net Promoter Score (NPS) or Customer Satisfaction Score (CSAT) that demonstrate a level of commitment to measure service quality on an ongoing basis.
You should anticipate spending a lot of time and energy on discussing, explaining, and verifying that the potential providers have all the necessary information to provide a solid response. Someone with the ability to react to the suppliers’ various questions quickly and clearly, which might range from simple explanations to complex technical architectural clarifications, is needed.
Once responses are in, it is a matter of comparing each and appointing a preferred provider to start negotiations. Even the simplest contract negotiations typically take several weeks until all clauses are finally agreed and documented. You want to retain some flexibility to vary small items during the contract phase so you can fine tune service to your needs. Typical variations include overlap for network links, existing software agreements that must be retained until they expire and other items that need to be transitioned from the incumbent to the new IT provider. This requires active communication with relevant parties to keep your tender within your target cost and terms.
3. Transitioning to the new provider
One of the most crucial aspects of outsourcing IT operations is the transition period, which must be organized and implemented effectively. Other considerations come into play as you begin the transition process. For instance, you may be concerned about avoiding downtime, maintaining security, performance, data integrity, and ensuring compliance issues are not overlooked.
You must carefully balance the cooperation with the current provider vs the need to onboard the new provider. Good management skills and a professional approach are required to keep both providers working in line with your plan. It is essential to maintain proactive communication with the successful bidder and hold them accountable for timely service delivery and proper transition activities. After all, they are the experts and should lead and be accountable for all transition steps.
You should also aim to establish proper governance from the beginning with the new provider including well-defined key performance indicators and ongoing reporting expectations. Reporting should start during or immediately after the transition period.
If you are doing the transition with internal resources, choose an experience person to oversee the transition and interface between the two providers. A well-executed transition will yield early positive results and will avoid many unnecessary headaches.
4. Continually improve IT service quality
Once you are up and running with the new IT provider, you must setup a series of regular checkpoints to ensure you are getting the value you expected. This involves setting up a routine of meetings and reports with the successful supplier to ensure constant monitoring of the service delivery. It also involves working with the vendor to design a continuous improvement strategy covering the next six to twelve months of performance.
You want your service to improve over time and you should strive to be at a higher quality level each year. Make these targets clear to your new IT provider.
5. Get help to reduce your IT outsourcing risk
Although complex, outsourcing your IT services will lead to long-term advantages and better business performance. But, there are many considerations when it comes to outsourcing your IT services, and it can take an extensive amount of time to work through these considerations.
If you have people on staff who are qualified to oversee such a project, you may choose to manage everything on your own. Many companies, however, either have too much on their plates or don't have enough experience to manage an outsourcing arrangement effectively. Instead, an external consultant can give you the proper support to help you achieve the most optimal outcomes quickly.
At Agile CIO Partners, we offer full tender management and have completed many successful tenders on behalf of our clients. We can help you think strategically about your company's objectives and understand your processes, helping you to reach your goals and achieve the best outcome. Contact us today if you like to discuss your needs.